History of Chicago. From the earliest period to the present time, Part 152

Author: Andreas, Alfred Theodore
Publication date: 1884
Publisher: Chicago, A. T. Andreas
Number of Pages: 1340

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"In money of the outer circles, we place the Bank of Chicago at par.

" Bills received on deposit so long as they keep good credit.

"Commercial Bank, I. Cook.

" Union Bank, Forrest Bros. & Co.

"Bank of Commerce, Davisson, McCalla & Co.

" Bank of America, Smith & Willard-Don't mistake this kitten of Illinois, for the old cat at Washington, lest you get your eyes scratched out by mother of frauds. Reject this as you would the small-pox. It was gotten up to bolster Wisconsin, but will be the fruitful source of speedy dissolution to the whole brood of cats, both wild and tame-regular and irregular.

" Merchants and Mechanics' Bank, Boone & Bron- son.

" Chicago Bank: not the Chicago Bank of I. H. Burch, or a shinplaster of Little Falls in the State of New York. This was conceived in iniquity, and went forth a fraud-a draft upon somebody not accepted, paya- ble at some place, without legal identity,

" Exchange Bank, H. A. Tucker & Co. This con- cern exists only in name, and exists only as the nurse of unfledged goslings hatched from rotten eggs, by the Macomb County goose at Mt. Clemens, the issues of which, like Smith's fraud at Washington, are not taken on deposit by us, any more than those Illinois River issues, which are sustained in being by the same system of ' Kiting.'

"City Bank -- This bank is said to be on its last legs, and the Penn Yan attachment which floods the country and which has been driven to protest by us again and again, will not be worth half price in a very short time. Depositors in this like those of Smith, are daily losing confidence, and the day of its doom is written. For some time past, they have shinned about for even shin- plasters, to meet their returning circulation, and have deposited their best securities with different bankers, leaving their remaining circulation without foundation. We don't think they can keep open doors one week longer.'

Sufficient has been quoted to show that the editor of the Christian Banker was not disposed to " turn the other cheek " when he was smitten, and that he did not pro- pose to give up his cloak nor even his coat without a vigorous fight. By his indiscriminate attacks on every body and everything, outside his own circle, he alienated the common sympathy which otherwise would have been bestowed upon him. He became the Ishmael among Chicago bankers, whose hand was against all others, and against whom every other banker's hand was raised. During the month of January, 1853, Paine's bank was constantly called upon to redeem every bill which came into the possession of rival banks. The circulation at its highest did not exceed four thousand dollars, yet this small amount kept Paine quite busy, as through the machinations of his rivals and enemies, it seemed to find its way back to his bank for redemption as fast as it could be paid out, and the circulation thus became a source of constant annoyance to him instead of proving, as he had hoped, a source of profit to himself and a bless-

ing to the community. In his tribulation, he looked to the departed spirits of illustrious bankers for counsel. It was given through a Mrs. Herrick, a speaking and trance medium, who, at that time presided as " high priestess" over the Spiritual Church in Harmony Hall. She, or rather Alexander Hamilton, through her, advised Paine and Eddy what course to pursue, and, in order to give specific advise on the daily and hourly emergencies as they might arise, the High Priestess came down from the altar and was installed behind the counter of the bank, as a spiritual director. She told them for whom to redeem, and who were to be denied. No smokers, drinkers nor bankers were to be paid. Women, children, negroes and spiritual minded men were to be served first. So soon as it became known that the bank was being thus conducted, on petition of Ira B. Eddy's friends, he was brought before Judge Skinner, and on hearing of testimony, a commission of lunacy was granted and he was declared incapable of managing his business affairs. An injunction was served in order to protect and preserve Mr. Eddy's interest in the bank. By the commission of lunacy Devotion C. Eddy was appointed conservator of the estate of fra B. Eddy, and John W. Holmes, book-keeper. As soon as this became known there was excitement without and within the bank. The holders of the bills began to flock in crowds to the bank, where Mr. Paine and the priestess were installed behind the counter grimly awaiting the assault of their enemies. Most of the bills were redeemed, but occasionally a man came up whom for spiritual reasons the priestess spurned. Such persons were collared by the husband of the priestess and one or two other stalwart Spiritualists who acted as door-keepers, and incontinently hustled out. Judge Hoard was thus tumbled, and Ezra L. Sherman, after a smart tussle with the spiritual police, came out in a dishevelled and flurried condition. The worthy Colonel (then Captain) James R. Hugunin made a wager at Swift's bank (cigars for the crowd ) that he could go over to the bank, being a friend of Seth, and get his bills redeemed. He took $35, and walked confidently across the street into the bank, and up to the counter, where he affably presented his bills for redemption. Paine looked favorably upon his case and would have redeemed on the spot, but the spirit of Alexander Ham- ilton looked sternly out of the eyes of Mrs. Herrick, and out of her mouth his words came in startling cadence. " Never ! get out ! ! " " Then give me back my money," said the mild-mannered Captain; " Never ! get out ! ! " again quote the priestess, and forthwith the Captain was hastily leaving the bank, wildly clawing the air as he proceeded toward the sidewalk, and the bank door was slammed, not exactly in his face. A moment after it was reopened, Seth appeared and gave to the shaken- up Captain the bills, and he returned to his friends at Swift's. "What luck, Captain?" cried the crowd. "Good !" "What kind of bills did Paine give you?" " The very same 1 carried over, and I was deuced lucky to get them. I think I can afford to pay the cigars."

Things culminated at the bank on the following day, February 11, when the conservator of Eddy's estate undertook to get possession of the bank. Ira l'. threatened to shoot, and the priestess refused to abdi- cate in favor of Holmes the book-keeper, whom the court had appointed. On complaint of Holmes, for attempt to intimidate by personal violence, the whole corps of the bank, including mediums and spiritual friends, were arrested and brought before Judge Rucker. The trial resulted in the discharge of two or three, and the binding over in $500, to keep the peace.

544

HISTORY OF CHICAGO.

of all others except the high priestess. During the trial she became unduly demonstrative, and was taken to jail, resisting the officers on her way quite stub- bornly. She was held in durance vile until the storm was over. Ira B. Eddy was for a short time in the Hart- ford Insane Asylum, but was soon liberated on petition of many respectable citizens who had known him long and well, and who had doubted from the beginning the means by which his committal had been brought about, as well as the alleged fact of his insanity.

The Bank of Chicago was, by the removal of Eddy's deposits, crippled to that extent that it never rallied sufficiently afterward to be even a disturbing factor in the finances of the city. So far as is known, every bill was redeemed and every indebtedness of the bank honorably paid, either by Paine, Eddy, or the conser- vators of Eddy's estate. The bank, eccentric as it was, was not, as were many of its contemporaries, buried either in dishonor or insolvency.

Paine continued to protest through his Christian Banker, and other channels, until summer had come, when he returned to Lake Zurich, where he lived several years indulging in his vagaries in a harmless manner. His theories and plans, however they may have occasionally brought discredit to his head as a well-balanced motive power, were ever creditable to his heart. Among his large-hearted enterprises, which he started after his banking experiment had come to grief, was a school on his farm. He named it the Stable of Humanity. He returned to Chicago in 1868, and organized a "Woman's Home." The object of the institution was to better the condition of that class of women who, having no homes, are forced to take such accommodation as the ordinary city boarding-house afforded. The Woman's Home was to be so conducted as to give to friendless women the comfort and protec- tion of a home at a moderate price. Paine managed the " Home " for several years. It was located at the corner of Jackson and Halsted streets, where the Far- well House now is. Mr. Paine died in Chicago in 1871.

THE BANK WAR .- The collapse of Paine's bank did not end, but rather intensified the antagonism between the legal and the illegal bankers. Indeed, the war had been carried on unceasingly all through the period covered by the preceding history of Paine's raid on both camps.

December 23, 1852, the Grand Jury found bills of indictment for carrying on a banking business in viola- tion of the laws of the State, against the following per- sons : Henry T. Adams and Charles L. Chase, of the Farmer's Bank; Seth Paine and W. T. Maier, Bank of Chicago; L. D. Boone and S. Bronson, Merchants' and Mechanics' Bank; Thomas McCalla, Bank of Com- merce ; J. R. Valentine, cashier of the Bank of America; and George Smith and E. W. Willard, Wisconsin Marine & Fire Insurance Company. The following allusions to the matter are taken from the Chicago Democrat of December 25, 1852: .

" Bank War .- The regular banks have succeeded in getting about a dozen of the irregular banks indicted. Those interested in the irregular ones are going to swear away the suit from. Couk County because both the Judges are stockholders in the bank whose head man * was mainly instrumental in getting up the crusade against the irregular ones. Meanwhile the irregular ones are demanding specie as fast as they can get bills to de- mand it upon. But the joke is, many of our regular banks

* Hun. J. Young Scammon, president of the Marine Bank.

are irregular ones too, and keep some old corporation of some old name to get extra shinplasters under or extra interest with. Thus they carry water upon both shoulders. The Spiritual Bank, so called, is believed to be backed by some of the wealthiest bankers in our city. At any rate it has good references, as see the card of Seth Paine & Co. under our advertising head. Let this bank fight go on until banks like individuals shall be made to obey the laws in every respect, in taking inter- est as well as issuing bills."

On the Ist of January, 1853, the Democrat said :

" Yesterday, all through the streets there was more excitement against the irregular banks than we ever knew before, and the irregular banks were searching in every direction for the bills of the regular banks so as to demand the specie. It is hard now to get hold of a regular bill. Great inquiry was made to know why some irregular banks were indicted and some not. We have inquired of the jury, and find that while their inten tions were good they could not get the requisite infor- mation against some, whilst certain of the regular bank- ers were over anxious to furnish information against others, the complainants being as prompt in withhold- ing information against some as they were to furnish information against others. The fact speaks volumes, that the wild-cats who have regular bankers for dor- mant partners were not indieted."

All was not harmonious even in the regular camp. There was bickering and heart-burning, and crimination also there, as is evinced by the following which appeared in the Democrat, January 1, under the caption of " Bank Reform :"

" See cards of Messrs. I. H. Burch & Co., Forrest Bros & Co., R. K. Swift and others in our columns (the cards do not appear in the issue). We are informed . that these gentlemen and several others of the regular banks in our city are ready to live up to the general banking law as to rates of interest, the moment another of the regular banks which abuses its own charter by resorting to an old insurance company * to protect itself in a gross violation of the letter and spirit of the General banking law, will loan to its customers as it does to . that insurance company."

The suits brought under the indictments amounted to but little. There is no record that anybody was ever punished for a violation of the law. Some of the irregu- lar or illegal banks went out of existence because of their inherent weakness, and others, having financial strength, took refuge under the statutesof Illinois, Wis- consin and other States. Under the indictments, it was found that the end was likely to be too far from the beginning, and that pending the decision of the Superior Courts, to which every case would be carried, illegal banking would go on as before. So the regular bankers, headed by Hon. J. Y. Scammon of the Marine Bank, determined to put an end to it by amending the bank- ing law, so that it should not only authorize banks, but should prohibit under penalty, the prosecution of any banking business in the State which should interfere with the franchises granted to the regular banks under the banking law already passed. Accordingly the Legislature passed a prohibitory law against illegal banking, and supplementary to the banking law of IS51, whereby it was made little less than felony to do a banking business within the State, except under the provisions of the statutes. The law read as follows :

. The Chicago Marine & Fire Insurance Company had been revived and was virtually under the same management as the Marine Bank. It was charged that the bank lent the insurance company at legal rates and that the insurance company put out the sine money for its benefit at illegal rates.

545

BANKS AND BANKING.

An Act supplemental to and explanatory of an act entitled "An act to establish a general system of banking," and to prevent the issuing and circulating of illegal currency.

SECTION I. Be it enacted by the people of the State of Illinois represented in the General Assembly, That the act to which this is supplementary shall be so construed that no person or persons shall become incorporated under the said act, until he, she or they shall have deposited with the Auditor United States or State stocks, as required by said act, so that the capital stock of said incorporation shall amount, in such United States stocks or State stocks, at the rate and value fixed by said act, to the sum of fifty thousand dol- lars ; and at no period during the existence of said bank shall the capital stock of the same, in stocks deposited as aforesaid, be less than the sum of fifty thousand dollars.

2. No bank, banking association, corporatioo, broker, banker, dealer in money, produce or foreign merchandise, or other person, shall emit, issue, utter, pay out, pass or receive in pay- ment, or on deposit, any bill of credit, bond, promissory note, written instrument, or instrument partly written and partly printed, to be used as a general circulating medium, or in lieu of money, or other currency or intended by the makers thereof to be so used, other than the bills or notes of banks of this State, counter-signed in the Auditor's office, according to the provisions of the act to establish a general system of banking, or the notes or bills (of a denomination not less than five dollars), of specie paying banks, created by an express authority of law, in either of the United States, Territories, tbe District of Columbia or Canada. Every bank, banking associ- ation, corporation, broker, dealer in money, produce or foreign merchandise, or other person, who shall violate the provisions of this section, shall forfeit and pay to any person or persons, who may sue for the same, the sum of fifty dollars for each and every bill of credit, bood, promissory note, bill of exchange, order, draft, certificate of deposit, or other instrument so issued, uttered, paid out, passed or received, contrary to the provisions of this section, to be recovered in action of debt, before any justice, magistrate or court having jurisdiction to the amount claimed in any such suit.

3. In addition to the penalties provided for in the foregoing section, every broker, banker, dealer in money, produce or foreign merchandise, and every officer, agent or employe, of any bank, banking association, corporation, broker, banker, dealer in money, produce or foreign merchandise, who shall offend against the pro- visions of this act, shall, for every bill, bond, note, order, certifi- cate of deposit, or other instrument or piece of paper emitted, issued, uttered, paid out, passed or received contrary to the pro- visions of this act, be liable to be indicted, and, on conviction, shall be imprisoned in the county jail not more than one year. It shall not be necessary in any indictment, suit or prosecution, under the provisions of this act, to specify or particularize any particular bill, note, bond, order, certificate of deposit, or other instrument, but it shall be sufficient to allege generally that the defendant or defendants have been guilty of violating the provisions of this act, by uttering, emitting, paying ont, passing or receiving, as the case may be, any such bill, note, bond, order, certificate of deposit, or other instrument, of the character or description which, by this act, are forbidden, or prohibited to be issued, passed or received, and proof of such general nature shall be sufficient to sustain such indictment, suit or prosecution.

4. Whenever it shall be represented to any one of the bank commissioners, upon the oath or affirmation of any credible per- son, setting forth the facts, or whenever, from any information, any one of the said commissioners shall have reason to believe that any bank, corporation, broker, banker, dealer in money, produce or foreign merchandise, shall have been guilty of any violations of the provisions of this act, it shall be the duty of said commissioner forthwith to proceed to the said bank, or place of business of such bank, corporation, broker, banker, dealer in money, produce, or foreign merchandise, officer, clerk, agent or employé, and then and there to inquire, by the oaths of the said broker, banker, dealer, officer, clerk, agent or employe, or other testimony. whether the said bank corporation, broker, banker, dealer in money, produce, or foreign merchandise, officer, clerk, agent or employe, have heen guilty of any violation of this act. The said bank commissioner shall have full power and authority to issue subpanas and attachments to compel the attendance of witnesses before him, from any part of the State, and shall have power and authority to administer all oaths and affirmations to parties, wit- nesses, or others, required to be administered or taken by this act; and shall have power to compel such broker, banker, dealer in money, produce, or foreign merchandise, or any officer, clerk, agent, or other employé, to answer all proper interrogatories pro- pounded to him, her or them, touching any violation of the pro- visions of this act, and may commit any such person to jail, for refusal so to do, there to remain until Anch party consents lo answer such interrogatory, or is otherwise discharged by due course

of law. He shall reduce the said evidence and answers to writing and report the same to the other bank commissioners and also to the State's Attorney for the judicial court in which the said bank, or other corporation, or the place of business of any such broker, banker, dealer, officer, clerk, agent, or other employé, may be situated. And if the said commissioner shall be of the opinion that any such banker, broker, dealer, officer, agent, or employé has been guilty of aoy violation of the provisions of this act, he shall make complaint before some judge, justice of the peace, or other proper officer, and the said judge, justice of the peace, or other officer shall proceed against the person or persons named in said complaint in all respects, as provided by the eighteenth divi- sion of chapter thirty of Revised Statutes, entitled "Criminal Juris- prudence;" and, for the purpose of compelling the witnesses to attend, may issue subponas and attachments to any part of the State: Provided, that no answer made by any broker, banker, dealer in money, produce or foreign merchandise, officer, clerk, agent, or employé, or any other person, upon any examination, made by or before any bank commissioner, judge, justice of the peace, or other officer, touching any violation of this act, shall be given in evidence against him, her, or them, on the trial of any indictment, suit or prosecution, for the recovery of any penalty of forfeiture imposed or provided for by this act, or in any other writ or legal proceeding whatsoever.

5. In case the bank commissioners, or a majority of them, shall be satished that any bank, corporation, broker, banker, dealer in money, produce, or foreign merchandise, or such officer, clerk, agent, or employé, has been guilty of any violation of the pro- visions of this act, they shall immediately apply to some judge of a Circuit or Supreme Court for a writ of injunction against such bank, corporation, broker, banker, dealer in money, produce, or foreign merchandise, such officer, clerk, agent, or employé, forbidding and restraining him or them from violating any of the provisions of this act; and such judge, after reasonable notice given to such bank, corporation, banker, broker, dealer in money, produce, or foreign merchandise, or such officer, clerk, agent or employé shall pro- ceed, without delay, to investigate the questions involved in such application, and shall have power to compel the production of all books, papers, vouchers, and documents in the possession of the defendants, or cause and to require answers, on oath, from such defendant or defendants; which answer shall not be evidence on trial of any other action or suit in law or equity; and if upon such examination, he shall be of the opinion that any of the provisions of this act have been violated, he shall issue such writ of injunction and enforce the same, in case it shall be disregarded, according to the practice of the courts of chancery; and further proceedings shall be had upon such application in the Circuit Court of the county where the office, or place of business, of such bank, corporation, broker, banker, dealer, officer, clerk, agent, or employé may be situated, as may be necessary to enforce the provisions of this act. And if it shall be finally determined by the judge or court, be cer- tified to the Auditor, which shall be sufficient authority to him, and he shall proceed to put the said bank into liquidation, in the manner contemplated by this act, and the act to which this is a supplement.

6. The bank commissoners to be appointed under the provi- sions of the act to which this is supplemented, before entering upon the duties of their office, shall take and subscribe an oath or affirmation, faithfully and impartially to perform all the duties enjoined upon and required to be performed by them, under the provisions of this act and the act to which this is a supplement, which said oath or affirmation shall be filed in the office of the Sec- retary of State.

7. Every payment made, in whole or part, in any bill, note, bond, order, draft, certificate of deposit, or other instrument nr paper, the passing, uttering, emitting, or use of which is prohib- ited by this act, shall be utterly null and void, and the persons or corporation to whom any such payment may have been made therein may sue and recover upon the original contract or cause of action, in the same manner and with like effect as if no such payment had been made.

S. No action shall be maintained in any court of this State upon any contract, expressed or implied, the consideration of which in whole or in part, shall be by any bill, note, check, draft, or other instrument or paper, the use, receipt, or emission of which is prohibited by this act, but the same shall be judged to be utterly null and void.

(). In all prosecutions and suits for the recovery of penalties imposed for any violation of the provisions of this act, the person> suing for the same, (notwithstanding he may be liable for, or may have given bond for the costs of such penalties when recovered.) and the defendant or defendants shall be competent witnesses.

10. This act to be enforced and take effect from aml after the first day of August next.

Approvedl February 10, 1853.

546

HISTORY OF CHICAGO.

So soon as the foregoing act was passed, illegal banking went out of sight in Illinois.

Smith's banking thereafter was legalized under a charter from the State of Wisconsin and became the Wisconsin Marine & Fire Insurance Company Bank; the deposit of bonds equivalent to the professed circu- lation of his Bank of America had legalized that, and he went on with his banking as before. If his currency

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History of Chicago. From the earliest period to the present time, Part 152

Author: Andreas, Alfred Theodore Publication date: 1884 Publisher: Chicago, A. T. Andreas Number of Pages: 1340

Author: Andreas, Alfred Theodore
Publication date: 1884
Publisher: Chicago, A. T. Andreas
Number of Pages: 1340